Good morning, ladies and gentlemen. Welcome to the CIBC Quarterly Results Conference Call. Please be advised that this call is being recorded. I would like to turn the meeting over to Geoff Weiss, Vice President, Investor Relations. Please go ahead.

Good morning, and thank you for joining us. This morning, CIBC senior executives will review CIBC's Q2 results that were released earlier this morning. The documents referenced on this call, including CIBC's Q2 news release, investor presentation and financial supplement, as well as CIBC's Q2 report to shareholders, can all be found on our website at www.cibc.com. In addition, an archive of this audio webcast will be available on our website later today. This morning's agenda will include opening remarks from Gerry McCaughey, CIBC's President and Chief Executive Officer. Kevin Glass, our Chief Financial Officer will follow with the financial review; and Tom Woods, our Chief Risk Officer, will close the formal remarks with a risk management update. After the presentation, there will be a question-and-answer period that will conclude by 9:00 AM. Also with us for the question-and-answer period, our CIBC's Business Leaders, Victor Dodig, Richard Nesbitt and David Williamson, as well as other senior officers. Before we begin, let me remind you that any individual speaking on behalf of CIBC on today's call may make forward-looking statements that are subject to a variety of risks and uncertainties. These statements may include material factors or assumptions that could cause CIBC's actual results in the future periods to differ materially. For more information, please refer to the note about forward-looking statements in today's press release. With that, let me now turn the meeting over to Gerry.

Thank you, Geoff, and good morning, everyone. Before I begin, let me also remind you that my comments may contain forward-looking statements. Today, CIBC reported net income for the second quarter of $811 million and earnings per share of $1.90. Return on equity for the quarter was an industry-leading 22.1%. Adjusting for items of note, earnings were $2 per share. We continue to lead the industry on the capital front. We finished the quarter with a Basel III pro forma common equity ratio estimated at 8.5%, and our Basel II Tier 1 ratio was strong at 14.1%. Earlier this month, Bloomberg Markets Magazine recognized CIBC as the strongest bank in North America and the third strongest in the world. This recognition underscores our first principle of being a lower-risk bank. As a lower-risk bank, we target value creation for our shareholders by generating consistent and sustainable returns. Our strategy is to grow by investing selectively to expand our client franchise where we have a competitive opportunity. We are taking steps to strengthen Retail and Business Banking by shifting to more of a customer-focused strategy to deliver profitable revenue growth. With this strategic shift, it is our objective to achieve industry revenue growth rates in our Retail Banking franchise. Our Wealth Management and Wholesale Banking businesses continue to perform well. We see opportunities to grow their relative contribution to CIBC earnings to both 15% and 25%, respectively, objectives which we have discussed in prior calls. Now turning to our business results in the second quarter. Retail and Business Banking reported net income of $556 million for the second quarter of 2012, up 12% from Q2 of last year. Revenue for the quarter was $2 billion, up 4% from a year ago. Credit quality in our retail portfolios continues to be strong.…

Thanks, Gerry. I'm going to refer to the slides that are posted on our website starting with Slide 5, which is a summary of results for the quarter. Overall, as Gerry said, we had strong results for the second quarter of 2012. On a reported basis, net income after tax was $811 million, and adjusted net income after tax was $840 million. This translates into reported earnings per share of $1.90 and adjusted earnings per share of $2. The details of our items of note are included in the Appendix to this presentation. So market -- while market conditions remained challenging, we generated good results in each of our business units. Our capital position remained strong with a Tier 1 capital ratio of 14.1%, the highest among our peers. In addition, our Basel III common equity ratio is estimated to be 8.5%. And we continue to maintain discipline in the management of our expenses while also investing in strategic business initiatives. Our reported efficiency ratio was 57.2%. And on an adjusted basis, it was 55.1%. We are very pleased with this outcome as it contributed to positive year-over-year operating leverage. Moving to the details for each of our strategic business units. I'll start with the performance of Retail and Business Banking on Slide 6. Revenue in the quarter was $2 billion, up $72 million or 4% from the same quarter last year. Personal Banking revenue of $1.59 billion was flat compared with the same quarter last year. Revenue was hurt by narrower spreads but helped by strong volume growth across most products, as well as by higher fee income. Our focus remains on strengthening our CIBC-branded products, where we continue to see success, particularly in our Mortgage portfolio, which grew 10% year-over-year and continue to exceed industry growth rates. Business…

Thank you, Kevin. On Slide 18, loan losses in Q2 were $308 million versus $338 million in Q1. Loan losses were down in Q2 mainly for the following reasons: First, $14 million lower losses in our Cards business and $11 million lower loan losses in our U.S. Commercial Real Estate business. On Slide 19, our Cards portfolio net credit loss rate in Q2 was 4.7% versus 5.0% last quarter. Our Cards delinquency rate trended down quarter-over-quarter. With respect to our Canadian residential mortgage portfolio on Slide 20, 78% of this portfolio is insured, with over 90% of the insurance being provided by CMHC. The average loan-to-value of our uninsured mortgage portfolio, based on February house price data, is 49%. On Slide 21, you can see our Canadian residential mortgage portfolio by region. The size of this portfolio is $145 billion, with approximately 46% on Ontario, followed by BC at 20% and Alberta at 17%. The net credit -- the credit quality of this portfolio continues to be high, with a net credit loss rate of approximately 1 basis point per annum. Slide 22 shows our Canadian residential condo mortgage exposure. Condos account for approximately 12% of our total mortgage exposure, with about 70% in Ontario and BC. Similar to our total portfolio, our condo sub-portfolio has a high insured mix at 78%, with an average loan-to-value of 51% for the uninsured portion. This slide also shows our condo developer exposure. At April 30, our drawn loans to construction projects were about $500 million or 1% of our business and government portfolio. The exposure is diversified over 50 projects. Slide 23 shows our exposure to European peripheral countries and countries in North Africa and the Middle East. Direct exposure to the Eurozone was down $405 million quarter-over-quarter. As you can see,…

That concludes our prepared remarks. We'll now move to questions. [Operator Instructions] Operator, can we please have the first question on the phone.

[Operator Instructions] And the first question is from Steve Theriault from Bank of America Merrill Lynch.

For David Williamson. David, you started making outbound retention calls, and Gerry alluded to this at the top of the call. Can you share your thoughts on the preliminary success rate you have? I know it's a small sample, but are you more or less confident in your 50% retention target? And then a related question on the mortgage side. Can you give us a sense in your base case how much margin improvement you'd get over, say, the next 3 years from the Mortgage Broker business running off, all else equal, so no rise in interest rates, no change in mix outside of mortgages?

Okay, Steve. So on the first question, which is our efforts to renew from the FirstLine channel into the CIBC brand. So first comment I'd make, it's very early days. We've just started that renewal process, and we reached out well in advance of the actual renewal, so this is pretty preliminary results. However, it is going well. The propensity to renew into the CIBC brand seems to be quite high. So at this point, it looks like we should be confident in the 50% target that I outlined last quarter. So early days, but our confidence regarding that target has increased. So on the margin front, there's no doubt that there is a spread enhancement. One of the reasons we're looking to make this shift is to increase the number of clients we have in CIBC, have deeper relationships with those clients and expand them. So you're speaking about the NIM component. To actually give a 3-year impact is tough because it depends on competitive pricing and the broker market competitive pricing, or not, in the call, this is called the direct market. So it's hard to give that kind of projection. What I can speak to is what we actually experienced this quarter because we did have a decline in the FirstLine outstandings as we effected our strategy. And the upside is that we did see enough uptick in spreads as a result of that mix change that it completely negated the impact of the lower interest rate environments on NIM. So the last many quarters we've seen compression on NIMs due to a low interest rate environment. This quarter though was completely offset by the positive impact of this mix change into our own branded mortgages. So hopefully, that helps you.

Okay, that's helpful. If I could, one quick follow-up on -- again, for David. The deal with Rogers, is there any exclusivity to that arrangement? And if so, how long?

So, no, the intent with that is really to see if we can, for Canadians and CIBC customers, get something going that's universal really. So the intent with us and Rogers working together was to get it to market. Frankly, our hope is that other telcos, other banks and so forth would participate so that CIBC customers can pay with their phone whether with Rogers or Telus or -- and it becomes more of a broadly-based capability. So the -- and Rogers has a similar mindset of innovation and wanting to also lead in this space. So they were a good partner for us to work together with. It's been a great partnership. So the intent here is to get it out into the market and hopefully, it scales up from there.

The next question is from Peter Routledge from National Bank Financial.

Just a couple of questions. Just first of all, on the Basel III ratio, how much higher will risk weights be under Basel III? I mean, we know we had the boost just recently because of Basel 2.5, but is there going to be a material increase in RWA from where you are right now, which is I think $113 billion? Brian O’Donnell: Peter, it's Brian O'Donnell. I'll take that question. Our RWA has definitely increased under Basel III. Well, we haven't given the numbers, slightly in the $7 billion to $8 billion [ph] range. But the bigger impact for sure is the deductions from capital under Basel III.

So I guess the next question would just be related to your preferred share redemptions you did in last year. There's some preferred shares that are going to lose utility as capital instruments starting in 2013 the Series 33, 35 and 37. So -- and I know they'd come up in 2014. But under what conditions would you do or are you at all considering tendering those early?

We have been proceeding with the following on our capital as pertaining to the preferred shares. What we have told the market is that we intend to redeem all of our preferred shares or we expect to, subject to all the appropriate conditions being met, that must be met. And that we, at a minimum, intend to do that at their earliest redemption date. And so, therefore, last year we redeemed Series 30 for $100 million. And this year so far we have redeemed Series 31 and 32 for $450 million and $300 million. We do have Series 18 at the end of the year, which is $300 million. And as you mentioned, in 2014, we have Series 33, 35 and 37, which are $825 million, and actually, the most expensive of our preferreds; these are the rate resets. Their redemption date does come up in 2014. So we do not expect, again, subject to all of the conditionality that I attached, that we'll let them go any longer than '14.

Would you rule out tendering early for those?

I would not rule that out.

Okay. And then any prospects of share buybacks just given how strong you are on Basel III?

Well, again, we've laid out in terms of our capital, first and foremost, to take out our preferred shares. Secondly, as we announced last quarter, we have stopped issuing -- we haven't stopped issuing shares, but we've removed the discount on our dividend reinvestment program, and that will reduce dramatically the amount of share dilution that has been taking place. We have that in place, so we would have a very, very strong capital position. The other item that's very important in terms of our progress on the capital front is that there's still an evolving regulatory environment. And I don't mean just domestically, I do mean the interplay between domestic requirements and what develops internationally. We are keeping an eye on that and would prefer a little more clarity in both -- in terms of both the international environment and how that might affect Canada prior to proceeding any further in terms of our capital activities. However, I would mention that CIBC has a very strong position in terms of our total common equity ratio in relation to the Canadian industry and internationally at 8.5%. There is another requirement, which is the Tier 1 -- effectively the Tier 1 ratio under Basel III, which when one adds that, we have incremental strength because we have more than $800 million of qualifying capital for that, which is our goal [ph].

The NVCC, yes.

Yes, which probably makes your question even more pointed. It is that on the Tier 1 level, we're at 9.25. If you add on approximately 9.25 because the NVCC, it's worth $0.70 to $0.75. And so I do believe that this topic will be receiving increasing attention from us in conjunction with clarity that we hope will emerge internationally and domestically as to requirements. It is an important topic.

The next question is from Michael Goldberg from Desjardins Securities.

First of all, can you explain what the commodity tax is that you referred to in the MD&A comment on non-interest expenses? And is there anything unusual in the second quarter tax rate? Or should we model -- be modeling in a tax rate of about 22%, 23% going forward? And then just following up on the capital question, given the strong capital position that you have, why no dividend increase this quarter? Is your 40% to 50% payout ratio objective based on reported or adjusted earnings?

Yes, go ahead.

Michael, first of all, we do look at both reported and adjusted earnings for purposes of payout. And I won't belabor it, but one would presume that adjusted earnings is the most indicative. However, if there was a wide variation of adjusted and reported on a continuous basis that one expected to continue, you'd have to keep an eye on your reported because that would -- that's what drives the actual amount of capital available. However, in our case, we do not have a wide variation in that department. Over the last 4 quarters, the payout ratio on both the reported or adjusted basis has generally been somewhere -- if there's a variation, it's been in the area of less than 2% on average for the last 4 quarters. And so, we do look at our payout ratio at this time as being the midpoint of our range. And therefore, we will be in the process of reviewing our dividend for an increase in the coming months.

Okay. And my tax question?

So, it's Kevin. I can take that, the first one was with respect to the MD&A, that would just have related to HST credits as we accrete up our estimates in the quarter, Michael. And could you please just repeat your income tax question?

Sure. I'm just wondering whether there was anything unusual in your second quarter tax rate on a tax equivalent basis? Or should we be modeling in a tax rate in the neighborhood of 22%, 23% going forward?

I think, big picture, there wasn't anything particularly unusual. There's always a bit of a movement relating to resolving tax issues. But that seems like a reasonable number to me for this.

The next question is from Gabriel Dechaine from Crédit Suisse.

Just on the Canadian margin, you mentioned the lower prepayment penalty cost paid to Treasury. I assume that is -- that relates to the breakage of funding for mortgages that terminate before term. Could you quantify that? And then also, that would indicate that your prepayment penalties are -- as a revenue item in this segment are somewhat elevated. Is there -- can you quantify what the prepayment penalties are relative to your normalized rate?

Gabriel, I'll take the question. David Williamson. So the -- yes, you're exactly right, so in relation as to the charge on early prepayment of mortgages. So if you eliminate that from NIMs, the quarter-on-quarter improvement in NIMs, effectively it takes us to flat. It was both a 4-basis-point impact, so a significant impact this quarter. That takes us to flat NIMs. Now you're -- now when you look at NIMs at flat, that's what I think Kevin put in his comments, a couple of things come out of that. One, as it compares well to our recent history, I think it compares pretty well to our peer group as well, and that is very much a function of this shift we're making to higher NIMs, CIBC-branded products or out of the broker markets. So that was the comments in our prepared remarks. Regarding -- you made a point about what's that mean to overall revenues. Strangely enough, that doesn't have any impact on Retail and Business Banking revenues because of the fact that Treasury results get allocated back into us and other. So there's that NIM impact. We have been pretty transparent over what that is. As far as the impact on revenues, we don't need to worry about it because less money goes into Treasury means less allocations come back to retail. So net-net, it's a wash.

Okay. So prepayment penalties would you hear not. But you're putting them in Treasury, I'm confused there, sorry.

Sorry. well, yes, we do pay that to Treasury, and then Treasury's results at the end of the -- Treasury's results get allocated back into Retail and the Other line, which is in revenue. So that part -- I think what your question was does this impact aggregate retail and banking revenues?

I'm asking if you get like the benefit of the prepayment penalty left in the revenue line in Canadian retail but not the cost allocation back from Treasury.

Yes. And the point I'm making is that although there's less repayment into Treasury, it gives Treasury less results this quarter. So therefore, less is being allocated back to retail. So specific answer to your question is, no, it does not have an impact on Retail and Business Banking revenues. It does have on NIMs, and that one we're pretty transparent about.

And can you give me a sense of the evolution of mortgage spread? And just in that CIBC-branded book, what -- and I've asked you this before like the percentage that renewed each year, what the spreads were like a couple of years ago versus what they are today, and if there's a significant component of your book that's -- that have yet to reprice in today's environment?

Okay. So you've got a few themes in there, Gabriel, so let me just parse it a bit. So we've got -- if I just go big picture just a bit because you do have some -- a few themes there. I mean, fundamentally, what we're trying to do is accelerate our revenue growth and in so doing we're trying to focus on building our client base deeper relationships. So that's the whole shift to focusing on CIBC-branded mortgages and deemphasizing broker. Now why I am highlighting that, that has a lot of impacts when you look at our growth in overall balances. We need to start to parse out the decline in broker relative to the gains in our own brands. So that's in market share, it shows up in our balance growth as well, and it's showing up in NIMs. So I think you were specifically talking about NIMs. You also talked about macro factors. The macro factors are there's a competitive marketplace in mortgages, particularly competitive, I would say, in the broker side of the world. For those looking for volume are the broker channels, particularly thin margins there. And as you know, there has been competitive pressures putting margin pressure on CIBC-branded mortgages. We haven't pushed in that space, and still the margins are stronger in the CIBC brands. So big picture, we are seeing better-than-market growth in our brands, definitely seeing balanced reduction in the broker side. And net-net, what that's doing is it's getting the NIM expansion that we were looking for early days. And then I think the other point you touched on was renewals. And what we said last quarter still holds. Normally, 50% of the balances renew, so we -- there's no reason for that -- for us to feel differently about that in the fullness of time or over a reasonable period of time. And we're -- part of that we're hoping to get into our brand is 50%. So 50% of 50%, if you will. And it's early days, but it feels like that still is the right target.

Okay. Well, I'll maybe follow-up after the call.

The next question is from John Aiken from Barclays.

I think we all appreciate the additional disclosure that we're getting on the condo developers. But Tom, can you talk about the drawn versus the undrawn and what would need to happen for that -- for the drawn to take up to the full amount and over what time frame that could occur?

Yes, John, the -- just go to that slide, so everyone has it, so it's Slide #22. We're showing a total exposure of $2.2 billion, with about 1/4 of that being drawn. The way it works is of the 3/4 that's undrawn, probably about half of that there is -- those are on projects that haven't begun. Projects typically take about 2 years, but nothing really happens in the first year, and construction actually only occurs in the back end. So we fully expect those to be drawn. But with the passage of time, as those are drawn, then the amount that is currently drawn would be paid off. So what we're showing, about a little over $500 million of drawn, that's a reasonable -- maybe a little -- maybe creeping up a little higher amount that would be drawn on a rolling basis, okay. So I guess what I'm saying is as you look at the $1.7 million undrawn, half of that are on projects that have not yet begun, and the other half is on projects that have begun but have not yet required the funds.

So, Tom, you wouldn't expect that to tic up to like $1 billion anytime soon or ever?

Not -- no, I think that's right.

The next question is from John Reucassel from BMO Capital Markets.

Just back to David Williamson for a second. You talked about the mortgage side, the spreads there. Could you talk about deposit side? And it looks like your deposit growth is a little slower, but could you talk about the difference in CIBC-branded deposits versus elsewhere, the growth rates you're getting in those deposits and trends there?

Okay, John, yes, I'll do that. So again, on -- for growth in deposits, same type of deal we need to parse out broker from CIBC brand, which is exactly where you were going. So in the SFI, you can do that, but maybe I can help a bit. In the Personal Banking side, on deposits, quarter-over-quarter, the growth is about 1.2%. Now how do we get there? There's a couple of things we need to adjust for. There is brokerage GICs, broker-based, high-interest savings accounts, which don't really help liquidity as much as pure deposits and have thinner margins. So we're really not focusing on that. In fact, in those areas there's a decline in balances, and we're okay with that given the spreads and given the liquidity value that provides. So that's from parsing that back and saying the growth is actually -- I think, 1.2% compares quite well to our peer group. The other thing I'd highlight, John, is that we kind of look at it on a money-in basis. And with money-in, we look at branch deposits. We also look at branch-based mortgage -- sorry, mutual fund sales. It doesn't help the liquidity of the bank, doesn't show up on our balance sheet. It helps more in Wealth Management. But as far as funds in and overall P&L impact, it's the right thing to do for the bank.

And is the pickup on in-branch deposits as -- spread is as dramatic as under the mortgages or no?

No, because -- it's an interesting question. The shift is more profound in mortgages, where we're really proactively running off the broker mortgage book and growing at a quite good rate relative to the industry on our own brand, on our own mortgage brand, so that's a pretty profound impact. On the deposit side, we're not as aggressively running off the high-interest savings balances or the broker GICs, so the shift wouldn't be as profound.

Okay. That's maybe still to come?

I would say it's just an ongoing trend, but probably not as aggressively as a shift in balances.

Okay. And then last question, in the outlook section, it was commented that you expect decelerating commercial loan growth for the rest of this year. Is there something unique happening there or just punching above your weight over the first half of the year? What could you talk about that statement in the outlook?

Certainly. So as far as overall Business Banking, we're really quite happy with the growth levels that we've got there. I mean, we now for 4 quarters consecutively have picked up market share in our Business Banking loan growth. So what I think the outlook is speaking to is we're going to strive to continue that better than industry growth in our Commercial Lending. We're continuing to pick up market share. In fact, over the past year, we're up 8%, almost 30 basis points in market share. What the point is in the outlook is in the specific area of commercial mortgages, it's just a risk-return calculation. It's a thin margin business right now, commercial mortgages, so we've just really taken our foot off the accelerator there. And in fact, quarter-over-quarter, we've had 0 growth in that book, which pulls down our overall growth. So if you look at Business Banking quarter-over-quarter growth, it's being impacted by us currently just pulling back in commercial mortgages. And unless spreads get fatter, we'll continue to pull back there, and that'll impact our Business Banking aggregate loan growth numbers. But that's just some that I feel in the current context is the right thing to do.

The next question is from Brad Smith from Stonecap Securities.

I have 2 quick questions. First, I was wondering if we could get a little bit of color on your Caribbean business. It's included in the corporate and other in terms of -- I understand that provisioning was up there, if you could quantify. And maybe talk just a little bit about the revenue progressions there, if that's possible. Also, I just wanted to clarify, when do you make your adjustment for your premium on the repurchase of the preferred shares? Where is that running through the profit and loss statement?

Thank you. Can we just deal with the premium? That's not a P&L item. It's a premium that we pay, but obviously, it impacts funds available for common shareholders, so it does impact EPS, but it doesn't flow directly through the P&L, Brad.

But am I correct in thinking that it's an add-back in your adjustments?

Yes, it is. It's an item of note that we've added back.

But it's not a deduction in the P&L itself?

It's not a P&L deduction, but we reflected an item of note, so that we can reflect the appropriate EPS number.

Right. But has it reduced the common equity shareholder income in the profit and loss statement?

Yes, it does, and it reduces the amount available for distribution to common shareholders.

I see. Okay, great.

Brad, it's Tom Woods. On your -- I'll start on the provisioning in Caribbean and hand it over to Richard Nesbitt on the broader outlook. We have the provisions in Q2 of $35 million, which was essentially the same numbers in Q1. I want to point out, if you're looking at Slide -- or Page 9 in the supplementary, provision for credit losses in Corporate and Other are actually going down. But you got to remember that, that 21 is a combination of the FirstCaribbean 35, and less the IRS equivalent of what used to be called the general loan-loss provision of 14. Whereas in Q1, the FirstCaribbean was 34 less the general of 3. I got a feeling is that both with respect to net impaired, as well as loan losses, we're getting and we may well be at the top. I don't want to say that Q3, Q4 are going to be down, but I think the tendency is for it to be down a little bit. But don't -- there's not certainty on that. There's half a dozen projects that we're working through, and some of the other banks you've heard on their calls the same thing, but it feels like we're -- there's a chance that those numbers could come down in the rest of the year. Richard?

Just on the business performance and the revenue. The revenue has actually been very stable over the last 6 quarters. And that's in spite of the fact that we have these very low interest rates coming out of the United States, and a lot of the interest rates on the activities of FirstCaribbean are related to U.S.-style interest rates. So the margins are compressed. So I don't think it's likely that we'll see a bounce in those revenues in the near term simply because the Caribbean, it continues to be in -- have been more affected by the credit crisis than even in North America was, and they continue to work through those issues. We are seeing some early signs of daylight at the end of the tunnel, and as long as something like Europe doesn't sideswipe the whole world economy, we remain optimistic. So we've been profitable through the entire credit crisis, through the entire situation that they've had to deal with. Revenues remained stable, and we're just going to work on it quarter-by-quarter. And we do believe that as the world heals itself, the Caribbean will benefit from that.

So just a supplementary then, if you're seeing a greater stress in that region, is that creating and do you have appetite for additional expansion through acquisition in that region?

I would say not at this time. It wouldn't be the right time to do that.

The next question is from Mario Mendonca from Canaccord.

A couple of quick ones. The commercial mortgage growth, obviously, commercial mortgages, the growth we saw quarter-to-quarter in Q2 was lower than what we saw last quarter. Business Lending, for example, was up -- I think it was -- looks like a full $1 billion last quarter and only $300 million this quarter. So what would be helpful knowing that you're going to slow down your commercial mortgage growth is how important it is to the entire piece from a quarter-to-quarter perspective? Say, last quarter, how much did they contribute to that, say, $1 billion lift?

Mario, David Williamson. So I haven't got specifics, but I mean, it's material to the growth rate. We're one of the banks that are active in the commercial mortgage business. And we mentioned in outlook just because in current spreads we are going to pull back in our participation. But we'll watch it. That's a business that you can adjust your participation fairly readily. So we'll give you updates as to whether we change it or not. But it's a significant portion of the book, so it's -- it did impact the growth rate. I haven't got at hand the specific amount that has pulled back this quarter's growth rate for Business Banking. We -- when you adjust into what the Business Banking growth rate was this quarter, we say it's about 2.5%, which compares well to peers, but is off our more recent run rates. Commercial mortgages is part of that.

So this quarter will probably be more indicative of the growth sequentially that is that we'll see going forward than, say, the previous quarter?

Yes, I think that's right assuming because right now the commercial mortgages NIMs -- or sorry, spreads are quite low, and we're trying to, as you know, accelerate revenue growth within a profitable way. So we're -- if those spreads stay where they are, then this would be more indicative of growth rates.

Okay. Another quick question. On expenses in Retail, you talked about $50 million in expenses over the next 3 quarters: $30 million in cash expenses; $20 million capitalized. But it didn't seem like we saw any of that this quarter. Could you sort of educate me on that? Did much flow through this quarter, and how much of that presumably was offset by cost-cutting elsewhere?

Yes, Mario, would be happy to talk to you. So we are investing, and we are making those investments we spoke of last quarter, so project spending is up. Our sales FTE are also up, and costs associated with the branch builds are up. So the investment is occurring. But you're right, we did have offsets from process efficiencies. I won't get into specifics. The nature of those efforts could be many and varied, but there's 2 buckets. One is we're trying to move FTEs from the back office to client-facing. We call it back to front, and there's been a few efforts, successful efforts, in that regard. And then we're trying to optimize the effectiveness of that front-line, and there's efforts underway in that regard. So the initiatives are actually aimed at enhancing client experience versus cost-reduction. But usually, there's a correlation. And I'll give you an example of one initiative that we've -- we fired up more recently, and that's looking at our end-to-end lending process. And again, the intent is from a client perspective to just have a tighter, crisper, faster experience. But my guess is if we lean out that process, we might have cost savings there as well. So we are making the investments we spoke of. They just were offset by process efficiencies this quarter. I would give a bit of outlook on that. Back in Q4, our expense growth was about 1.5%, and I said at that point, that's pretty good kind of indication of what we're expecting. We've done better than that the last couple of quarters, but I do think that, that is a reasonable target for us to have. So really good operating leverage this quarter. I'd love to believe we'd be able to maintain that, but we won't because we're going to continue to make these investments. I think you're reasonable to see some uptick in expenses.

And the 1.5% quarter over -- sorry, was the 1.5% quarter-over-quarter in Q4 or was that year-over-year?

It was year-over-year.

Okay. And that you're saying that, that sounds more reasonable to you then?

Yes, that's -- given the investments we're making, that sounds more reasonable. Now we're going to keep working on process enhancements. So there is this investment in growth and process improvement dynamic, but I think 1.5% is a pretty good kind of target to have in mind.

The next question is from Darko Mihelic from Cormark Securities.

Actually, my question was also related to expenses in your Retail division. I guess my question more revolves around your FTEs, your longer hours. Where are you with respect to mobile specialists, David? And can you give us an outlook for when will you -- how far are you taking the expanded hours relative to some of your peers? Could you have a metric for us?

Yes, Darko. So a couple of things there you've mentioned, sort of investment in front-line, investment in sales, we'll continue to do that. So on a mobile advisors' front, we're continuing to push forward a couple of objectives we have in that regard. One is the sheer numbers. I think we're up around 600, much higher than where we were before, obviously not near the levels of some of our peer groups if I continue to scope for growth there. And two, on the kind of systems front, we want to, over time, enable them to be able to do more and more products, so they can offer a diverse product range which, again, feeds to our objective of deeper relationships. In the past, our focus has been on mortgages. So that's one area where we're going to be investing. On hours, yes, we are going to be moving forward. A couple of things, we're going to be adding to us a number of branches open on Saturdays, a number of branches open on Sundays. That will be happening later this year. We need to just get it in effect, get the things organized. We're also going to expand our hours during the week. And that's something that is frankly not an insignificant change that we're going to be making over the next little while. So we're going to -- in aggregate, 2 reasons: One is client experience. We think that our branches during the week should be in a position where we're open till 5 or later. And during the weekends, it's proven to be a time where we have higher value conversations with our clients. So we want to expand our Saturday and Sunday openings. The numbers we've run would indicate we'll need to have more people in place, so it will be cost, but our experience historically indicates it'll more than self-fund, so good for the client experience and good for the target of accelerating revenue growth.

And the timing for this is -- sorry, is you said later on this year?

Yes, it will be in the autumn of this year, September of this year, that type of time frame.

And there's no lag -- you mentioned that it's self-funding, but is there like a lag, so at the beginning, you should see some expense bump and then revenues shortly thereafter or...?

That's one -- it's an interesting comment. Because some of the investments we're making definitely do have a lag, especially more systems-oriented ones, where we make the spend, takes a while for the system to get built and then revenues kick in. Others are faster. I'd put this in the faster category. We're putting steps in place to have our front-line teams have better information, be better placed for effective sales. I think with extra people in the branch, this will have a fairly quick pick-up on revenues. And frankly, the impact on expenses here isn't that significant. A lot of what we're going to be working on here is just working with our teams to try to balance the hours that we have for our folks in the branches. So certainly, the weekday hours and so forth won't be a big impact on expenses. And weekends, there will be some, but it's not a big expense impact. Better, reasonable revenue lift off of it.

This is all the time we have for today. I'd like to turn the meeting back over to Mr. Weiss.

Well, thank you very much for joining us this morning. That concludes our call. Please contact Investor Relations with any follow-up questions. Have a good day.

Thank you. The conference has now ended. Please disconnect your lines at this time, and thank you for your participation.